The Top 40 Ways to Improve Your Credit Score

One of the first and most important tasks most everybody should tackle as an adult is establishing and improving their credit score. That’s because people with great credit enjoy lower loan rates that can result in serious monetary savings.

To put that in perspective, if you borrow $200,000 and get a 30-year mortgage at 5%, you’ll pay $176,011 in interest over the life of the loan. On the other hand, if you have to pay 6.5%, you’ll end up paying an additional $66,994 over the same time period.

So how can you improve your credit score? Well, I think I have more than a few ideas, both directly and indirectly. Here they are in no particular order:

Get a credit card and establish a credit history.

Better yet, get two credit cards. Then use them responsibly.

If you have had problems in the past, reestablish your credit history ASAP.

Comments

1

Chupacabrassays

Len,

Could you clarify point 19 for me? I thought you wanted a statement balance that would show a 1-5% credit utilization on your credit reports, then payoff the balance between the statement date and the due date to avoid interest. Is this not the case?

The theory behind number 19 is if you paid the card off before the statement date, then you would ensure a minimum credit utilization rate because you’d clear your purchases before they were officially reported.

I can’t believe i’m also doing this now. You know, just two weeks ago i was desperately in search of a hacker or anyone at all that could save my credit from the disaster it was in. Then i stumbled upon a discussion group on the internet and this hacker was spoken of by many, some in this kind of manner as i’m writing here. I emailed him through the email and the rest is history. My whole life changed and my marriage, saved. My credit scores are up now and my late payments erased. You know what to do, if you’re having any problem with your credit. Tell him i referred you

5

Jack Baileysays

You saying the truth Miss/Mrs Webster. He’s really one of a kind. Saved me from being homeless.

6

Marcussays

I emailed a freelance credit expert for my credit repair. Can’t thank him enough. My credit issues are all fixed including the eviction I had was removed.

7

Mike Sanderssays

All of the credit scores are proprietary, so no one knows with certainty, but at least one study has suggested that having a 5-9% utilization rate is optimal.

First of all, not all card issuers report to bureaus synchronous with your due date. Call and ask. Second, there are plenty of 0% interest cards out there. So between 1 and 2, you can carry small amounts of debt and/or time payments around the reporting date to maximize your score.

I don’t think it’s a huge increase, but at the end of the day, carrying some reported debt makes you a more attractive client for a credit card issuer than someone with 0% utilization. They only make swipe fees on 0% clients. Hence, a higher credit score.

Put yourself in the bank’s shoes and the reasoning becomes more clear.

Len, I like your advice about emulating how someone of modest means stays out of debt! Not only will that improve your credit score it will allow you to build real wealth. I teach a Personal Finance Course to Middle School Students and am always shocked at the lack of financial literacy skills of my students. Credit is one topic I cover and we go over several scenarios showing the total cost of financing with excellent, good, and bad credit scores. One issue we talk about in class is delayed gratification or the lack there of and the financial cost of financing things we want rather than waiting until we have the cash.

Nearly 5 years ago, when I was 20 (and under my mom’s health insurance), the insurance apparently didn’t pay all of a medical bill and it ended up going to collection. I found out about this last year (I am now 25) and paid the amount. It was approximately $300. Since I have actually been actively managing my money and living on my own, I have had an excellent credit record – pay everything on time, have had one car loan and a credit card, and now have a home mortgage loan. Is there nothing I can do to remove the small collection amount from my credit report? It is so frustrating that I didn’t even know about the collection and that it is only a small amount but negatively affecting my credit score.

Sadly, Dani, I don’t believe there is much you can do. The best advice I know of is to check the info about the collection account and check for any errors — no matter how insignificant. According to Credit.com:

“If any of the information reported about the collection account to the credit reporting agencies is inaccurate or incomplete, you have the right to dispute that account with the credit reporting agencies. They must verify the information with the source. If the source doesn’t confirm the information within thirty days, the credit reporting agency must remove it. Some agencies will not bother to verify older paid collection accounts.”

More good news … time is your friend. Over time, the impact of the negative report on your credit score diminishes. So even though it may stay on your record for seven years, it is less of an impact in year two than year one — and even less in year three than year two.

i don’t usually buy into an idea until i give it a trial. all of my life my credit profile was in poor condition and i had a lot of problems with creditors. i was deprived of many things i needed most in my life. i almost ran into bankruptcy. i have lost a lot. but len, your tips helped me increase my score from 435 to 802! now i’m able to to do so many more things for myself and my family. thank you.

There’s a saying that “If you are depressed,you are living in the past. If you are anxious, you are living in the future. And if you’re at peace, you are living in the present”…Live in the present(in the now). Do not be afraid or embarrassed that you have a bad credit score — only be embarrassed to continue living with your present score.

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